June 16, 2023
Don't Start With Technology, Start With People

Originally posted as part of the Q1 New Business Review by The Business News.

If you watch the headlines, you still see startups garnering millions in investment from Venture Capitalists, Angels, and even large corporate funds, even in this economy.

It’s very enticing to want to start an app. But, you should focus on building a business, not a product.

Like any good business, you start with customers at the center, and then go out from there.

  1. Who are you serving?
  2. What problem is unsolved or where the solutions in the market are inadequate and therefore frustrating and begging for a change?
  3. What does truly solving the problem do for your customer? Who does it help them become?
  4. What value drivers can you create a solution around?
    - Decrease Risk
    - Decrease Expenses/Waste
    + Increase Revenue
    + Increase Efficiency

Starting a tech company by thinking that you have to build an app, is the same as not designing a car, but creating an entire production grade warehouse with all of the robotics and machinery to produce the cars at scale. 

Instead of thinking about your product as an app, think about the product as the outcomes you produce for the people you serve. 

That makes it easier to start without all of the fancy bells and whistles, without the five to six figures in startup capital you need, and makes it much easier to learn how you can improve both the experience you provide and the results you generate for customers. 

If you haven’t solved the problem for one customer one time, how can you be sure the automated workflows and logic you’re building into the app are actually going to hit the mark?

You’re not. Plain and simple. 

The companies that begin their journey with an app, usually end in dissolution. It doesn’t always happen right away, but usually the struggling signs are there. It typically starts with difficulties acquiring customers, and then when you do, it’s hard to keep them because you can’t iterate fast enough to meet their needs. 

Unless you’re Amazon, Apple, or any extremely profitable company that can afford to invest in launching new products and learning from them, you’re going to run out of cash.

99% of your startup will be defined and refined after you’ve already launched, so prioritize learning fast so you can figure out what works, and what doesn’t.

It’s True for both Startups and for Corporations

Jeff Bezos of Amazon knew this. He also knew that business is multi-layered and while you can have a large vision of the future, you have to isolate the problems and start solving them as close to customers as you can. 

“Start with customers, and work your way backwards.” - Jeff Bezos

The late Steve Jobs of Apple also learned this lesson the hard way.

“You’ve got to start with the customer experience and work backward to the technology. You can’t start with the technology then try to figure out where to sell it.” - Steve Jobs, 1997

As a fellow founder, it’s easy to get impatient with the time it takes to close the gap between today and the future that we can create. Visionaries like Jobs and Bezos also feel this pull, but have learned to tamper both expectations and the time to meaningful results. 

There’s a saying that I believe originated with the Navy Seals that can help you approach business in a more successful and sustainable way.

“Slow is smooth, and smooth is fast.”

This means not skipping the steps because you want the results, but rather relishing in the appropriate attention to detail so that as things progress, you move forward, not back. 

If you’re jumping forward and back across the chain of learning with your startup, you’re likely standing in one spot, and making little progress. 

When you slow down now, you can grow faster later.

Building a Minimum Viable Business

In the tech startup world, the acronym “MVP” stands for Minimum Viable Product. 

A minimum viable product is an early version of your product that has just enough features to be useful for people to use, with which you can gather feedback, learn, and improve.

This is a great start to a winning mentality in business where you start small with your vision, and then go from there.

But, as the name suggests, a Minimum Viable Product includes a product. Most first-time founders interpret that as a mobile or web app, a digital product. 

At Headway, we stopped thinking about MVPs and are now framing it MVB, Minimum Viable Business.

MVB: the amount of effort and capability you need to sell, close, and serve your first customer.

The questions we ask lead to specific answers. If you change the question, the answer almost always changes.

If you ask: 

“What do I need to include in my MVP?

This question leads to features, platform decisions (like launching on iOS, Android, or Web), level of fidelity and user experience, branding, etc.

Instead, I encourage you to ask: 

“What do I need to do to provide the value my business offers to a customer?”

This question leads to a combination of time, hands-on concierge, some tech-enabled processes, but breaks you out of the build-first mindset.

It brings you full circle to the list of questions (and more) I mentioned early. These are the difficult decisions to make and the customer conversations that most founders put off. 

They think they’re obvious, but until they’re defined and documented, they’re a moving target.

  1. Who are you serving?
  2. What problem are you solving for them?
  3. What does truly solving the problem do for your customer? Who does it help them become?
  4. What value drivers can you create a solution around?
    - Decrease Risk
    - Decrease Expenses/Waste
    + Increase Revenue
    + Increase Efficiency
  5. How much is solving the problem worth to them?
  6. Who are the competitors that enter the customer’s mind when someone comes across your business?
  7. How is your solution differentiated?
  8. How are you going to acquire customers?

When you answer those questions, you come back to the process and tools you need to serve your customer.

As we mentioned earlier, you need to serve one customer, one time, and then iterate.

Complete The Learning Loop

A big part of building a successful business is trying to get eyes and ears in the right places. That means understanding what your customer is doing and also understanding why they're doing it. 

When building businesses, leveraging the scientific method and adopting an experimentation mindset will help you think about things in a different way.

In following the scientific method, you:

  1. Define a hypothesis.
  2. Build an experiment to validate or invalidate it.
  3. Instrument the experiment with tools to measure.
  4. Conduct the experiment.
  5. Review and reflect on what went right, what went wrong.
  6. Review your experiment to make adjustments and iterate and begin the loop again.

The Lean Startup by Eric Reis applies these principles to building companies. 

“Startup success can be engineered by following the process, which means it can be learned, which means it can be taught.” - Eric Reis 

They simplify the scientific method into the Build, Measure, Learn loop.

The Build word alone can hang up a lot of first-time founders and think they need to build an app to test their idea.

In reality, you just need to start with talking to the people you’re looking to serve.

Methods of Experimentation

In the pursuit of clarifying and focusing on building an MVB, we define the process as:

Experiment, Measure, Learn.

This way, the experiment we choose is all about focusing on what we need to learn:

  1. Interviews - Do the people I’m looking to serve have this problem?
  2. Landing Pages - If I present people within my target an offer of what my business could do for them, are they motivated to get access or buy?
  3. Prototypes - If I’m able to demonstrate the value and outcomes I can provide, will people buy before they try?
  4. Proof of Concepts - Can I do this accurately through technology (mostly for highly technical/complex processes that connect multiple endpoints, APIs, or tech)
  5. Application - When I give someone access to the application that provides value, are they successful in onboarding, activating, and getting value? Will they come back? Will they renew their contract or subscription?

Plan to Adapt

The process of creating a plan is important, but we know the plan is always wrong. That means as soon as we start testing in the real world, the things we measure tell us that we’re wrong and we need to adapt.

When we measure the results of our experiments, the two types of research that will help you learn and iterate are Quantitative and Qualitative.

Quantitative – these are the things that are measurable, and are objective by default. This includes how many people landed on my landing page, how many people signed up for a demo or early access, how many people actually showed up to the call, etc. 

Qualitative - these are things that aren’t measurable but are subjective. This includes how solving the problem makes your feel, what their perception of your offer is, what they thought your business could provide, how they might compare you to the other alternatives in the space, etc.

Making sure your tools, scorecards, and processes are set up to capture both types of data will help you iterate and adapt continuously.